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Section B: Notes to the Group financial statements for the year ended 30 June 2026
B14 Financial risk management and derivative financial instruments (continued) Market risk (continued) Effects of hedge accounting (continued)
2026
2025
$M
$M
Hedges of fair value interest rate risk
Hedges of cash flow interest rate risk
Hedges of fair value interest rate risk
Hedges of cash flow interest rate risk
Interest rate swaps hedging Australian dollar borrowings
Fair value hedge AUD-IRS
Cash flow hedge AUD-IRS
Fair value hedge AUD-IRS
Cash flow hedge
Hedging relationship Hedging instrument Notional amount AUD
AUD-IRS
975
4,251
255
4,526
1:1
1:1
1:1
Hedge ratio
1:1
September 2032 to June 2036
December 2027 to March 2036
December 2025 to March 2036
September 2032
Maturity dates
At 30 June Carrying amount of hedging instruments
12
253
4
99
During the year Change in fair value of hedging instrument used for calculating hedge effectiveness Change in fair value of hedged item used for calculating hedge effectiveness
8
(146)
4
(91)
(11) N/A
147 146
(4)
93 91
Effective portion of hedging instrument recognised in OCI Hedge ineffectiveness recognised in profit and loss Weighted average hedged interest rate as at 30 June 1
N/A
(3)
—
—
1
4.5 %
3.5 %
3.7 %
3.3 %
1. Based on average fixed rate of interest rate of swap contracts, which does not include any margins that may be applicable on the hedged debt instruments.
Credit risk Credit risk refers to the risk that a counterparty may default on its contractual obligations, resulting in financial loss. The Group is exposed to credit risk with its financial counterparties through entering into financial transactions in the ordinary course of business. These include funds held on deposit, cash investments and the use of derivative financial instruments. Counterparty credit risk management is governed by Board approved policies and frameworks. The Group manages its counterparty credit risks by dealing with counterparties that are investment grade, using counterparty credit exposure limits and maintaining a diversity of counterparties. Counterparty credit ratings and market conditions are reviewed continually with limits being revised and adjusted where appropriate. Counterparty credit risk exposures are minimised through the netting of offsetting exposures and are monitored daily across the Group. An International Swaps and Derivatives Association (ISDA) agreement must be in place between the Transurban dealing entity and the counterparty prior to executing any derivative financial instruments and, where possible, standardised netting and set-off arrangements are included. Transurban Finance Company Pty Ltd (Transurban’s corporate borrowing entity) maintains all required Group counterparty credit risk metrics under the Board approved Group Treasury Policy. Credit quality of trade and related party receivables is assessed having regard to potential risk of default, relevant economic indicators and any changes to the nature and collectability of balances. Refer to Notes B7 and B27 for further information. Liquidity risk The Group manages its liquidity risk in accordance with Board approved policies and frameworks. The Group maintains sufficient cash balances and access to committed undrawn borrowing facilities to maintain short-term flexibility and enable the Group to meet financial commitments in a timely manner. The Group monitors liquidity by monitoring rolling forecasts of its liquidity position based on expected cash flows and liquidity metrics. Rolling forecasts consider operating expenditure, committed capital expenditure, debt maturities and payments to security holders. Long- term liquidity requirements are refreshed semi-annually as part of the Group’s funding plan updates and annual strategic planning process. Liquidity risk is also managed by maintaining a minimum level of liquidity comprising cash balances plus committed undrawn borrowing facilities at the Group’s corporate level. This protects against potential changes in short-term commitments and is held to support the Group’s forecast annual operating costs and committed capital expenditures. Transurban Finance Company Pty Ltd (Transurban’s corporate borrowing entity) maintains all required Group liquidity metrics under the Board approved Group Treasury Policy.
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